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Oncor Earned a Lot of Dough While Texas Fried

Oncor, Texas' largest energy delivery company, increased revenue by $60 million due to Texas heatwave
Oncor, Texas' largest energy delivery company, increased revenue by $60 million due to Texas heatwave Photo by Elijah Ekdahl on Unsplash
It’s not the Observer’s job to tell you it’s hot. At this point, it’s not even news. What is interesting though, is how Oncor, Dallas-based and and Texas’ largest energy delivery company, increased revenue because of it.

According to an Aug. 4 press release, the company generated a net income of $229 million in 2022’s second quarter, which is $60 million higher than their second quarter income for 2021.

Oncor does not sell energy to consumers; it operates the distribution lines and transmission towers that run through neighborhoods.

“Texas is obviously a deregulated state, so we’re different than other parts of the country where you might have a utility that both owns power plants, supplies the power lines to get the power to the customers and then sells it to them,” said Grant Cruise, Oncor communications manager. “Oncor is a strictly transmission and delivery company. We don’t have any power generating plants, we also don’t sell power to customers … we’re basically the FedEx.”

In the release, Oncor’s CEO Allen Nye attributed the increase in income to the recent heat and the increase in consumer demand, and Cruise agreed.

“It’s tied to the heat, obviously as people are using more electricity to try and stay cool,” Cruise said. “If you have a year of record setting temperatures for an extended period of time, you know, people using more electricity directly connects to how much money … Oncor and other electric utilities make.”

But even with the record heat for consumers, and Oncor’s rising net income, on May 13 Oncor filed for a 4.5% rate increase, or a rate case, with the Public Utility Commission (PUC) of Texas.

The PUC regulates the state’s electric, telecommunication, water and sewer utilities, implements legislation, and assists customers in resolving complaints. They have the ultimate say in whether Oncor can increase its rates.

“A utility can file a request for a rate increase, and it will be considered by PUC staff, customer stakeholder groups who intervene in the case, and, ultimately, the commission,” said PUC Director of Communications Rich Parsons.

Parson said that staff and intervening customer groups will review the request and make recommendations to the commissioners, who then vote on granting the increase and at what rate.

“The commission may adopt recommendations by the staff or customer groups or adopt rates based on the company’s request, but ultimately, the commission’s decisions are based on the entirety of the proceeding’s evidentiary record,” said Parsons. “The Oncor filing is moving forward according to its procedural schedule. We do not speculate on the outcome of these rate cases.”

According to the press release, the rate increase, if approved, would account for another annual revenue increase for Oncor of approximately $251 million.

Oncor is required by law to file a rate case every four years, and they haven’t had a rate increase since 2017. This rate increase for 2022, offset by an extension during the pandemic, was scheduled long before the record high temperatures.

“This rate review is part of a regularly timed, supervised process as outlined in PUC rules, with the goal of continuing to provide our customers with affordable, safe and reliable service, while also meeting the growing energy needs across our service area,” said Connie Piloto, spokeswoman for Oncor’s communications department.

She said that with the increase, they are trying to recover the amount they invested in the grid in order to bring electricity to the public, or their transmission distribution assets, and Cruise noted that the summer temperatures did not play a role in it.

Piloto said that they have invested more than $10 billion in the grid, and have a $15 billion improvement plan, which is needed in part due to the continued growth in the area.

“We’ve seen more than 70% increase in new transmission interconnections just in the second quarter, which is an all-time record,” Piloto said. “Since 2017 … we’ve added nearly 10,000 miles of new and rebuilt transmission and distribution lines, and have had more than nearly 355,000 new customer connections.”

Nonprofit consumer advocacy group Public Citizen, whose Texas office supports reducing electricity demand and affordable utility bills for Texans, believes there is a lot of room for improvement in the Texas electric grid.

"The widespread power outages during Winter Storm Uri, and the risk of more during this brutally hot summer, make it clear that the grid is far from secure," wrote Adrian Shelley, director of the Texas office of Public Citizen. "The grid is simply not ready for many more summers like this one or another extreme weather event like Uri, both of which are more likely because of climate change."

Oncor does have ideas about sustainability, published in their yearly corporate report, that includes delivering cleaner energy and advancing other energy efficient opportunities.

As far as Winter Storm Uri goes, and others that might happen in the future, they state in the report that "While Oncor does not own, operate, or control grid- connected power generation plants or facilities, the company has been working to identify innovative transmission and distribution solutions that could minimize the impacts of, or even avoid, third-party generation-shortfall events such as occurred in Winter Storm Uri in the future."

But while Oncor does not generate power for the grid or sell it directly to customers, there is a charge on customer’s bills from Oncor for transmission and delivery, or 'T and D'.

“The rate increase has to do with that charge that’s on everybody’s bill that’s connected. That is related to their T and D charges,” Cruise said. “That’s where that rate increase comes in … it’s the cost that our customers pay for the transmission and delivery of their power.”

Piloto explained how this rate increase, if approved at 4.2%, would affect an average residential customer who uses about 1,300 kilowatts hours per month.

“Let’s say that … customer has a retail electric plan that is 11 cents,” said Piloto. “The rate would be adjusted to 11.46 cents, so it would mean a cost increase of about $6.02 per month, or about 20 cents a day.”

Piloto maintains that Oncor’s rates are the lowest of any investor-owned utility in Texas and will remain so even if the requested increase passes.

“Even with significant growth in customers and needed infrastructure, we still remain focused on making efficient and cost-effective investments,” Piloto said.
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Kate Pezzulli, an editorial fellow for the Observer, is a graduate student at the Mayborn School of Journalism at UNT. Besides storytelling, she likes sailing, working on Jeeps, camping, potting and baking. Voted No. 1 friend in an apocalypse.
Contact: Kate Pezzulli